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China Stocks: Flee or Hold Steady?

The Shanghai Composite index is down 46 percent from its October highs, its worst showing ever. Is it time to get out of China investments?

Peter Navarro, UC Irvine business professor and Jack Perkowski, author of "Managing the Dragon," offered their insights to CNBC.

"For the time being, the risk in Shanghai is more on the downside," said Perkowski. He said that China's is a momentum market, sensitive to investor moods.

Wireless provider China Mobile and oil firm CNOOC were evidence of that Wednesday, each stock losing ground on the New York Stock Exchange.

Navarro, author of "The Coming China Wars," agreed about the near-term gloom, pointing out that Solarfun Power's IPO "went from $40 to $12" -- a sign that China continues to be "very, very risky."

Recommendation

But on the same day that Trina Solar and Baidu.com showed gains (on the NYSE and Nasdaq, respectively), Navarro thinks brave investors may want to stay the course -- especially with Chinese firms listing on U.S. exchanges.

  • Video: watch the entire interview (4 mins, 2 secs)

"The yuan is going to be appreciating more and more rapidly," he believes, supporting Chinese stocks. "Long term, it's probably a good investment."

Disclosure

Information was not available as to Navarro's or Perkowski's holdings.

Disclaimer

Symbol
Price
 
Change
%Change
BIDU
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883
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941
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TSL
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